The objective of this project is to define the initial, intracellular events of glucocorticoid hormone action and steroid hormone action in general. The first step of steroid binding to the intracellular receptor is followed by activation of the receptor-steroid complex to a DNA/nuclear-binding species that then binds to those nuclear acceptor sites involved in the regulation of transcription of specific genes. It has long been thought both that half saturation of the whole cell receptors by steroid should afford half of the maximal amount of biological response and that the various induction parameters for each agonist and partial antagonist should be invariant. In contrast, our studies of glucocorticoid induction of tyrosine aminotransferase (TAT) revealed that the concentration of a glucocorticoid agonist required for half maximal induction (EC50) and the amount of agonist activity produced by a partial antiglucocorticoid were not the same for all responsive genes within the same cell. Furthermore, both properties for TAT induction varied over a period of several weeks. This variation has now been reproduced in less than or equal to 40 hr simply by changing the cell density. We are not aware of any previous report of cell growth conditions affecting either the percent agonist activity of a partial antisteroid or the EC50 of a full agonist. These variations were found to require the presence of a 21 bp sequence of the TAT gene. We call this 21 bp sequence, which acts in concert with a trans-acting factor identified by gel shift experiments, a glucocorticoid modulatory element (GME). This GME, which is located at - 3654 to -3634 of the rat TAT gene, is an authentic transcriptional element to the extent that it conveyed its properties to heterologous genes and promoters. A model incorporating this new element is advanced which can explain, for the first time, the observed variations of TAT induction. Future studies of this model should provide useful information for understanding the control of steroid-regulated gene transcription and the control of gene transcription in general.